Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
Why ESG reporting?
Regulations, voluntary reporting, and greenwashing
Since the EU taxonomy came into force in 2020, the real estate industry has been under enormous pressure to make its environmental, social, and governance (ESG) performance transparent. Currently, many investors are already demanding ESG reporting standards, such as ECORE or GRESB. Many German real estate owners also report their ESG performance voluntarily, in particular according to the standard of the German Sustainability Code (DNK), which is based on sustainability indicators of the Global Reporting Initiative (GRI) and the European Federation of Financial Analysts Societies (EFFAS) – because even those who are not yet obliged to report today will have to do so in the future and should set the course early on.
The problem: With a multitude of standards, portfolio owners run the risk of presenting investors with distorted ESG performance – keyword: greenwashing. The EU taxonomy in particular therefore aims to create a common framework for the identification and labeling of ESG activities and obliges real estate portfolios to standardize reporting.
Maintain property value
In addition to regulations, ESG reporting is particularly important with regard to investors, as it makes the impact of company activities transparent, thus creating the basis for informed investment decisions. Good ESG practices ultimately impact building value and resilience in times of crisis. Undoubtedly, investors avoid companies that demonstrate poor ESG performance.
Pain point Excel
However, ESG reporting is currently a lengthy process because a large amount of data, including consumption, CO2 emissions, or ESG strategy, that must be collected, analyzed, and communicated to assess the ESG performance of various properties. In particular, the common use of Excel makes ESG reporting a time-consuming, cumbersome, and error-prone endeavor. For employees, it is hardly feasible and demotivating to do data entry in large Excel spreadsheets manually.
How to make ESG reporting easy
Data availability and standardization
There is no single, universally accepted standard for ESG reporting in the real estate industry. As a result, there is a lack of comparability of ESG performance. A variety of metrics and indicators that are not comparable or use different definitions and calculations also make it difficult to accurately assess ESG performance.
For ESG reporting, real estate companies also need to draw on various data sources, such as energy and water consumption data and waste rates. However, barrier-free access and sufficient quality of these relevant data are not always available. Properties in a real estate portfolio are usually located in different regions, making data integration and analysis difficult.
An ESG management software creates an accurate overview of scattered and unsorted ESG data for properties within a few days. These are collected over the entire calendar year, generating a clean database with your ESG strategy, consumption values, data on technology as well as the building envelope. As a result, all the information is in one place and you don’t start from scratch for your ESG reports, but build on continuously collected data.
Automatic reporting, without Excel
Excel poses difficulties in managing, analyzing, and visualizing data, as well as security and collaboration problems. The enormous manual effort required to enter data in Excel is hardly feasible for a single person – which is why several users from different departments often use one file, which, however, is not designed for this purpose.
Excel also limits the reusability of data from one reporting campaign to the next. This results in a large number of different Excel versions during the reporting process. When new reporting questions are added or, for instance, CRREM pathways are adjusted, chaos ensues.
An ESG management software like Predium does ESG analysis for you, reports your status quo, and handles your long-term ESG action planning to achieve ambitious ESG goals and avoid property value loss. Complex scenario planning based on timeframes, costs, funding opportunities, and savings potential is handled in a comprehensible way and at the push of a button.
Finally, with an ESG management software all information flows automatically into ESG reporting, which is constantly adapted to updated standards. This way, you avoid greenwashing as well as the time-consuming work with Excel, and you can communicate your progress and planning to all stakeholders individually and comprehensively. Investors, residents, employees, politicians, and society receive a comprehensible overview of your ESG activities.
Written by Jens Thumm, Co-Founder and CEO at Predium Technology GmbH, and Viktoria Niggemann, Working Student for Communications at Predium Technology GmbH.
References
Welcome – GRESB. (2023, 30. Mai). GRESB.
Sustainability-related disclosure in the financial services sector. (o. D.). Finance.
